The principal aim of an airline fuel manager is

to ensure the cost-effective, on-time delivery

of on-specification jet fuel to each of its

operating aircraft. Ensuring a secure supply

of fuel to the airfield is also known as keeping

the airport “wet.” Getting on-spec fuel to the

airport is the first step. Second comes the safe,

cost-effective administration and operation

of airport fuel systems, and maintaining the

quality of the fuel all the way into the aircraft.

To this end, over the past several decades,

at more than 60 airports in the United States

and Canada, airlines have chosen to share and

oversee the operation of a single fuel system.

This common, multiple-user system provides a

more efficient and cost-effective alternative to

having an array of exclusive-use fuel systems

on the airport. At these airports, airline fuel

consortia are established to operate, manage

and finance improvements to and replacement

of common fuel systems. The consortia

typically act through committees, representing

all member airlines in an equitable manner, to

govern all matters concerning the common-use

airport fuel systems and, in many instances, off-

airport fuel facilities and distribution systems.

At locations where the airlines collectively

own, operate or lease the fuel facilities or

other assets, they may choose to form a

legal entity (e.g., corporation, LLC, nonprofit

organization). Otherwise, the airlines, through

a simple committee structure as established in

the airline consortium organic agreement(s),

will govern and control the operation and

maintenance of the fuel system facilities.

While a fuel consortium is responsible for the

administration, oversight and operation of

the facility, it is typically supported by third-

party professional services such as legal,

environmental, engineering, financial, quality

assurance and regulatory compliance.

April 2019 Questions or comments? Contact fuel@airlines.org.

Management of Airport Fuel Systems

Fuel Committees in North America

AdvisoryAirport authority has full ownership and control

of the fuel system; it publishes and collects fuel

system-related throughput fees from all airlines.

Advisory committee – not a legal entity – is

formed to help airlines communicate with the

airport authority on fuel system-related issues,

but typically lacks an interline agreement to

define cost/liability allocation and step-up

provisions.

CommitteeAirport authority owns the fuel system but

chooses to have a group of airlines manage/

operate without a fuel system lease;

alternatively, the airport leases the fuel system

to an airline and a fuel committee is formed to

select the M&O operator, manage the system

and share related costs. Not a legal entity, but

often members sign an interline agreement

to define cost/liability allocation and step-up

provisions. Generally, the airport does not

dictate the fuel system throughput fee charged

to airlines.

LLC/CorporationLLC is the most desirable modern structure,

characterized by a legal entity that has signed

a fuel system lease with the airport – key

elements to obtaining financing for capital

investment. Unlike LLCs, corporations may issue

stocks to attract investment but offer less tax-

return flexibility.

• Legal entity formed to negotiate on behalf of any

airline that wants to join

• Lease with the airport

• Interline agreement to share costs

• Non-member rates and non-contracting users

• Legal counsel

• Maintenance-and-operation (M&O) agreement

• Insurance and bank accounts separated from the

operator

• Independent environmental counsel and/or

engineering consultants

Fuel Consortium Characteristics • Creditworthy entities able to borrow in public and

private markets

• Annual budget and membership meetings

• Full financial disclosure

• Credit protections from member bankruptcy and

late payments

• Transparent and frequent communication from the

chair on important issues

Quality ControlA single system assures higher-quality fuel, with fewer

opportunities to introduce contaminants.

ExpertiseBy sharing resources, participants are better suited

to directly manage the critical on-airport jet fuel

distribution facilities.

Security of SupplyThe airlines collaborate to ensure sufficient storage and

reliable delivery systems, thereby ensuring continuity

of flight operations.

EfficiencyA consortium enables a wide array of carriers to

consolidate all fuel systems into one and work

collectively to control costs.

Fuel Consortium Principles

Fuel Consortium BenefitsFor Airlines

• Control to optimize supply chain and ensure access to multiple suppliers

• Long-term lease allows for long-term planning on- and off-airport

• Financing at consortium level advantageous for three reasons:

• Improved creditworthiness reduces financing costs, due to ability

to tap markets as infrastructure rather than as airlines

• Borrowing structure can be customized to match project needs

• Debt remains off individual airlines’ balance sheets

For Airports

• Simplified negotiating process with a single entity

• Can lead to better communication

• Step-up provision reduces airports’ counterparty risk

• Transfers responsibility for execution to the consortium

• Infrastructure planning based on airlines’ aggregate business plan

• Financing at consortium level does not affect airport credit metrics

• Common operator promotes improved fuel quality control and inventory

management transparency

• Membership changes do not require corporate document amendments

or renegotiations

• Airline assumption of lease promotes environmental stewardship

• Cost-effective management of fuel system helps airport retain and attract

air service

Ideal Airport Fuel System• Multiple fuel suppliers, one tank farm operator, multiple into-plane providers

• A single cost-effective, not-for-profit facility

• Airlines hire and oversee the facility operator

• Economical, competitive fuel supply and into-plane services

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